1.The income statement is linked to the balance sheet through: A.The cash accoun

Question

1.The income statement is linked to the balance sheet through:

A.The cash account

B.The stock account

C.The costs of goods sold

D.The retained earnings account

2.The sale of a birdbath on credit would affect all of the following accounts except:

A.Cash

B.Accounts receivable

C.Costs of goods sold

D.Inventory

3.The purchase of a copy machine with a useful life of 5 years would affect which of the following?

A.Fixed Assets ( PPE)

B.Investments

C.Inventory

D.Retained earnings

4.Receiving cash from customer who owed a balance from a sale made in the previous accounting period would:

A.Increase gross margin on the income statement

B.Increase total assets on the balance sheet

C.Increase retained earnings on the balance sheet

D.None of the above

5.The interest paid on a note payable would be classified as a(n):

A.Financing activity on a statement of cash flows

B.Operating activity on a statement of cash flows

C.Repayment activity on a statement of cash flows

D.Investing activity on a statement of cash flows

6.The sale of long term bonds payable would be classified as a(n):

A.Financing activity on a statement of cash flows

B.Operating activity on a statement of cash flows

C.Repayment activity on a statement of cash flows

D.Investing activity on a statement of cash flows

7.The proceeds from the sale of land that had been held for investment purposes would be classified as a(n):

A.Financing activity on a statement of cash flows

B. Operating activity on a statement of cash flows

C. Repayment activity on a statement of cash flows

D.Investing activity on a statement of cash flows

8. Under the accrual basis of accounting, the difference between the ending cash balance and the cash balance at the beginning of the period will be the same as net income for the period.

A. True               B. False

Explanation / Answer

1.  income statement is linked to the balance sheet through- D)The retained earnings account

2.The sale of a birdbath on credit would affect all of the following accounts except- A)Cash account

3.The purchase of a copy machine with a useful life of 5 years will affect - A).Fixed Assets ( PPE)

4. Receiving cash from customer who owed a balance from a sale made in the previous accounting period- D)None of the above

5. The interest paid on a note payable would be classified as :A)Financing activity on a statement of cash flows

6.The sale of long term bonds payable would be classified as:A)Financing activity on a statement of cash flows

7.The proceeds from the sale of land that had been held for investment purposes would be classified as:

D)Investing activity on a statement of cash flows

8. Under the accrual basis of accounting, the difference between the ending cash balance and the cash balance at the beginning of the period will be the same as net income for the period-- B) False

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